Lead Plaintiff Set In Lawsuit

Information Not Disclosed, Investors Say

February 1, 2006|By Glenn Singer Business Writer

A federal judge in Miami has appointed an Italy-based investment management firm as lead plaintiff in an investors' lawsuit against Plantation-based Andrx Corp. for failing to disclose serious problems with its Davie manufacturing plant.

After Andrx revealed the problems on Sept. 5, noting the Food and Drug Administration had suspended new generic drug approvals, Andrx stock sank more than $3 the next day from $17.94 to $14.89. That resulted in significant losses to unsuspecting investors, including Pioneer Investment Management Group SGRSpA in Italy, according to its lawsuit.

Lawyers are seeking class-action status, saying that all Andrx investors between March 9, 2005, and Sept. 5, 2005, similarly were hurt financially by the company's failure to disclose the extent of problems discovered during three government inspections.

"The allegations are that the company knew full well it was in big trouble with the FDA based on inspections of the plant -- that there were red flags hanging out there," but Andrx's previous public statements never revealed a problem related to good manufacturing practice, attorney Kenneth Vianale of Boca Raton said.

Vianale's firm, Vianale & Vianale, is serving as liaison counsel to the New York firm of Murray, Frank and Sailer LLP, which represents Pioneer Investment Management Group in Milan, Italy.

U.S. District Judge William P. Dimitrouleas agreed last month that Pioneer had legal standing in the case. He will await Andrx's response to the lawsuit, which could include a motion to dismiss. Once he rules on that motion, both sides will gather evidence and question possible witnesses under oath before the case goes to trial. The process could take years, Vianale said.

Meanwhile the FDA is assembling an inspection team to reinspect the Andrx plant and examine its manufacturing processes. That inspection should begin before March 1, an FDA official said.

For the suspension on new drug approvals to be lifted, Andrx needs to correct more than 100 deficiencies related to the production of a small number of drugs studied by FDA inspectors. The company also must show that its corrective actions carry over to the production of other drugs at the plant.